Thursday, January 11, 2007

You are a new driver and at a stop red light and the light turns green. Should I go? Is it safe? Do I need to look both ways first? HONK!!! HONK!!, Move it you idiot! The light is green!It takes time to become confident without hesistation in taking your signals. A trader should trade without fear and take his signal without hesistation like he has done it a million times before and he knows what his possible outcomes of the trade are ahead of time. Two things can happen. PROFIT or LOSS. A smart trader puts in a logical stop that has a good risk to reward. And a good trader also has a profit target in site before he enters the trade.

Today I hesitated. Actually, I hesistated all this week on my signals. All of my signals this week would have been excellent trades too. What is happening right now is my brain is trying to learn to trust the system so that I have more confidence in my trades and to make the transition to trading its signals without hesitation or fear. The last 2 weeks it didn't given me a wrong signal. If I set up an automated account it would have kicked my butt this week. So my goal from here on out is to start trading it's signals without hesistation. Once I get a signal, I must be prepared before I can take the trade. The trade preperation required is to have a profit and stop target in site already drawn on my chart so that I can see where the near term support and resistance points are for my signal to travel to if it is correct. Next step is to make sure I have confluence from the other indices and TICK charts I'm watching. Next step is to pull the trigger. Before I even get the trade signal though, I should have planned out that day what I would do if I came to this type of scenario, so that I would be prepared for the signal, by having trend lines of support and resistance drawn on my chart. Also I need to be able to recognize what type of trading day we are going to have by the action in the first 30 minutes of trading so that I can be prepared to take a trade that is based off of either a range day or a breakout trending day. As always I need to trade with a stop and trade a position size that I am comfortable with losing several trades in a row on.